REO's and Short Sales

For you seasonsed investors, I have a couple of questions whose answers may be obvious to most. Can an REO be short saled? Can a short sale be done after the property has gone to auction? Does the short sale have to occur BEFORE it becomes an REO? A realtor recently told me that a property had to be listed for at least 30 days before a bank would allow a short sale to be done? :help

The term short sale is used when describing the negotiations between the homeowner and the lien holder(s) to satisfy the debt of the lien for less than what is owed in an attempt to avoid foreclosure. A foreclosure can be devastating to a homeowners credit and financial future while at the same time it can create a lot of expenses for the bank. Once a property goes through foreclosure and is purchase back by the bank it is then labeled as an REO.

An REO begins as soon as the foreclosure auction is over and the bank assigns the property to the asset management company that manages the banks REO portfolio. Sometimes this is in house and sometimes it is sub contracted out. Once assigned to the management company it is further assigned to a specific asset manager within. This person go through the necessary steps to get this new REO listed on the market for sale. Part of this process is to write a marketing analysis about the property which gives them the listing price.

What the Realtor was telling you is that after the REO is listed on the market for 30 days the asset manager does a listing price market review. This is when they decide to reduce the property list price or not. If there have been little or no offers they will drop the list price. It is after this first 30 days that lower reasonable market offers are considered. The key is to understand the definition of ‘reasonable’ and how to bid at the low end OF ‘reasonable’.

GooD LucK! :beer